TUC Chief Urges Burnham to Reject Choice Between Defence and Public Services

The leader of Britain's trade union movement has told the government to stop treating defence and public services as competing claims on the public purse, setting out a list of tax and ownership demands as unions gather for their annual Congress.

Paul Nowak, general secretary of the Trades Union Congress, said ministers should reject what he described as a right-wing argument that the country must choose between national security and the schools, hospitals and councils that depend on public funding. His intervention comes weeks before the Chancellor, John Healey, delivers his first Budget.

The unions' shopping list

At the centre of the TUC's plan is a sharp increase in the tax paid by banks. Mr Nowak wants the bank surcharge, the additional levy on lenders' profits, raised to 35%, which the TUC estimates would bring in £60bn over four years. The unions have spent the summer highlighting bank earnings, pointing out in August that the four biggest high street lenders made around £29bn in the first half of the year.

Mr Nowak also called for:

• reform of the Office for Budget Responsibility, which he characterised as acting as a brake on growth;
• Thames Water to be placed into special administration, effectively bringing the troubled utility under temporary state control;
• the Employment Rights Act to be implemented further and faster, particularly the provisions on guaranteed hours for workers on insecure contracts;
• a second employment rights bill, including changes to corporate governance.

Alongside those demands, the TUC has pressed for heavier taxation of wealth.

Where the government stands

Prime Minister Andy Burnham has sought to straddle the argument. He has said he supports investment in national security, but that it "can't come at the expense of social security", a line that has been welcomed by union leaders.

The Conservatives have attacked that stance, accusing Labour of putting a rising benefits bill ahead of the country's national security.

The TUC's position on defence is long-standing. At last year's Congress, delegates passed a motion under the banner "Wages not weapons", opposing an immediate rise in military spending on the grounds that it would squeeze money for education, health, local government and the move to clean energy.

A tight fiscal backdrop

The union demands land at a difficult moment for the Treasury. Borrowing costs have climbed in recent weeks, eroding the room the Chancellor has against his fiscal rules, and business groups have urged him not to raise taxes on companies again.

Mr Healey has kept to Labour's manifesto promise not to raise income tax, VAT or employee National Insurance, but he has declined to rule out other tax increases in the Budget. That leaves levies on banks, wealth and business among the options being debated in Westminster.

The banking industry argues that it already carries a heavier tax burden than its competitors in other major financial centres, and bank bosses have been making that case directly to the Prime Minister and the Chancellor.

What happens next

The TUC will feed its proposals into its formal submission to the Treasury ahead of the Budget. The unions also want faster progress on the parts of the Employment Rights Act that have yet to take effect.

For Mr Burnham, who won the Labour leadership promising a sharper focus on living standards, the challenge will be keeping the unions on side while reassuring markets and business that the public finances are under control. How far the Budget moves towards the TUC's agenda on bank taxation is likely to be one of the clearest early tests of that balancing act.

Image: Derek Blackadder via Wikimedia Commons, CC BY-SA 2.0